DXY inter-markets: gauging Fed’s intentions

The greenback - tracked by the US Dollar Index - is struggling to advance for the second week in a row following the grim Payrolls figures for the month of August (151K). The index has come down to test the 95.20 area, albeit it has recovered some pips soon afterwards towards the mid-95.00s.

Of course, the data added to yesterday’s miserable print from the ISM Manufacturing, pouring at the same time cold water over recently rising bets on a potential rate hike by the Federal Reserve as soon as this month.

However, the drop in USD seems to lack of follow through for the time being, as yields in the US money markets have quickly shrugged off the results and are now rebounding from earlier daily troughs, helping USD to reclaim ground lost.

Looking ahead and with Payrolls already in the rear-view mirror, inflation figures and Fedspeak will be the only barometers of the Fed’s sentiment towards a rate hike this month or the next ones. In the meantime, the area of 96.30, where sits the 200-day sma and this week’s highs remains the interim target in case the buck resumes its upside, immediately followed by 96.50 (August’s double tops) and reinforced by the 23.6% retracement of the June-July up move at 96.54.